Vodafone Idea Falls Over 7% Post Widening Q3 Losses; Nomura Sees 27% Downside

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Vodafone Idea Falls Over 7% Post Widening Q3 Losses; Nomura Sees 27% Downside
Credit: © Reuters.

By Malvika Gurung

Investing.com -- Shares of the debt-ridden telecom company Vodafone Idea (NS: VODA ) slid 7.17% to Rs 11 apiece at 12:15 pm post poor earnings performance in the December quarter.

As a result, the foreign brokerage Nomura (T: 9716 ) has maintained its ‘Reduce’ rating on the telco stock and set a target price of Rs 8/share, a downside of 27.3% compared to its current price.

The telecom company is set to host an earnings call today at 2:30 pm, and the brokerage will closely monitor the management’s commentary on fundraising, its rationale behind opting for equity conversion option, recent subscriber trends post tariff hikes and updates on 5G trials and spectrum auctions, stated Nomura’s note.

It will also await some clarity on the company’s capex guidance and debt repayment plans.

Despite opting for a 4-year moratorium on all government dues, the telco has to repay a debt of Rs 11,300 crore in 12 months, which would require external fundraising and steep tariff hikes. 

Also, as the telco has opted for equity conversion of accrued interest on Government dues, there could be a 56% equity dilution, and without significant fund-raising, the company’s network investments and 5G rollout would be constrained, at least in the near term, stated Nomura, cited by an ET report.

In Q3, Vi’s consolidated loss widened by 59.5% to Rs 7,230.9 crore YoY, while its revenue declined 10.8% to Rs 9,717 crore. Its subscriber base too slid 8.3% to 24.72 crores YoY, while its ARPU climbed to Rs 115 from Rs 109 QoQ.

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